By Geoffrey Smith
June 23, 2017

Good morning,

Today we’re publishing online Robert Hackett’s feature about the Google SWAT team of hackers that is trying to cover the frighteningly large number of gaps in security across the Internet. It’s an engrossing read that reveals much about how companies allow, detect, and respond to a kind of incident that gets no less frightening with familiarity. It’s the cover story for Fortune’s July edition and you can read it here.

Today, of course, is also Feedback Friday. Here are a couple of responses to yesterday’s note about CEO pay that add a degree of nuance that I couldn’t provide:

“I’d guess the divergence has not been nearly as pronounced at any level other than the CEO level—obviously the absolute ratio would be much lower, but, more specifically, I’m guessing you’d see a lower historical growth rate divergence between non-CEO c-suite and the average worker. And, so the CEO:worker ratio appropriately gets the headlines, but in that sense represents the problems of the 1% of the 1%. So, the question would be—is prosperity creation through corporate jobs more “equitable” if we change the data set by dropping out the winner-take-all CEO?”

“The problem is the methodology boards use to set pay. It is almost entirely based on “comparables.” What does the competition pay? We need to pay a bit more than that because we need to retain our CEO. Yet they all benchmark themselves off each other, resulting in a spiral of escalation, with no end in sight.”

(Thanks also to JUST Capital’s Robert Brown for pointing out that Ronald Reagan was borrowing from the Jewish religious scholar Hillel.)

On the subject of female representation on boards, which I talked about on Wednesday, Peter Gleason, CEO of the National Association of Corporate Directors, wrote to say that the issue is definitely not a shortage of qualified candidates. He pointed out that boards last year appeared to be putting more emphasis on prior board experience in candidates, “which leaves many qualified women out of the mix.” He also said there was no evidence to blame activist investors for what could still easily prove to be an outlying blip, but did agree that “the increase in other diversity categories for directors may have made up for the overall drop reflected in the number of women directors last year.”


Finally, this:

“This guy is terrible. Everything he writes is leftist and anti-business.”

The British orchestra conductor Thomas Beecham used to say that when you go on vacation, you should look for a deputy “good enough to keep them coming, but not so good that they don’t want you back.” At least I’m halfway there.

Enjoy the weekend. Alan will be back on Monday.

Geoffrey Smith



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